Funds for Liabilities

Regulation 16(1) requires Code operators to ensure that sufficient funds are available to meet the specified liabilities which arise on or before the date on which a relevant event occurs, or may arise at any time during the liability period.

The specified liabilities are defined in Regulation 16(10) as, amongst other things, costs or expenses reasonably incurred by a highways authority in removing redundant electronic communications apparatus or making good any damage caused by the installation or removal of such apparatus.

A relevant event is defined in Regulation 16(10) and in short refers to a Code operator ceasing to trade or being prohibited from providing, or ceasing to provide, the electronic communications network for which it was given Code powers.

The liability period is defined as a period commencing on the occurrence of relevant event and ending on the third anniversary thereof.

Code operators are responsible for assessing their liabilities under Regulation 16 and ensuring that sufficient funds are available to meet the specified liabilities.

Ofcom has adopted non-binding guidelines, published by its predecessor Oftel, on how Code operators might assess the cover they require in order to meet their duty under Regulation 16.

The associated statement provides further details.

In 2010, Ofcom published a statement setting out a specimen performance bond as an example of the type of instrument that code operators could choose to put in place in order to secure provision of funds. On 25 April 2022 , we made a minor revision to the specimen performance bond  to reflect an amendment to Regulation 16(1)(a) of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 (made by the Digital Economy Act 2017 (Consequential Amendments to Secondary Legislation) Regulations 2017). In particular, we replaced “paragraph 9 of the Electronic Communications Code” with “Part 8 of the Electronic Communications Code” in the second paragraph of the specimen bond.   We would emphasise that the specimen bond is for illustrative purposes and is just one means by which a code operator can fulfil its obligations under Regulation 16. Code operators should seek their own independent legal advice on the precise drafting of the bond (or other instrument that they provide to comply with Regulation 16) to ensure that they fulfil their statutory obligations.

Regulation 16 requires Code operators to provide Ofcom with a certificate confirming that they have fulfilled their duty to ensure that sufficient funds for specified liabilities are available. The certificate must be provided to Ofcom at least 2 weeks before the Code operator exercises its Code powers for the first time, and annually on 1^st April thereafter.

The certificate must be accompanied by copies of any insurance policy, bond, guarantee or other instrument which will provide the funds.

The requirements for the certificate are specified in Regulation 16(2) to (6) inclusive. Our statement on funds for liabilities provides further details. Please refer to our revised specimen certificate rather than the version in the statement.

Certificates and associated documents should be addressed to the ECC Team by email to ECCcodepowers@ofcom.org.uk

Ofcom is aware that there may have been some confusion amongst code operators about the statutory liability period required under regulation 16. The "liability period" is defined to mean "the period commencing on the occurrence of a relevant event and ending on the third anniversary thereof" and is intended to provide any beneficiary with sufficient opportunity following the occurrence of a relevant event to assess whether it needs to make a claim against the relevant instrument. Code operators should be aware of the requirements of regulation 16 and ensure that any instrument they provide makes appropriate provision to discharge this duty.